One of the assumptions underlying the production possibilities frontier or curve for any given economy is that:

Question

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The production possibilities frontier assumes that when the economy is on the curve, all resources are fully employed. This means that there is no idle labor or capital, and the economy is producing at its maximum potential given its resources and technology. The other answer choices are not true assumptions of the production possibilities frontier: A) the state of technology can change, but this is reflected in the shape and position of the frontier over time; B) resources are not unlimited, and the frontier shows the limits of what can be produced given finite resources; D) goods cannot be produced outside the curve, as this would require more resources than are available in the economy.

One of the Assumptions Underlying the Production Possibilities Frontier or Curve